M/s. Penguine Panes, Nani Daman V. The Income tax Officer.Vapi Ward-4, Daman

ITA 1991/AHD/2010

• Counselvise Citation: 199120514 RSA 2010
• Duration Of Justice: 3 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 06-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 08-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Keywords: Bad and doubtful debts
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER ITA NO. 1991/AHD/2010 A.Y: 2005-06 M/S. PENGUINE PANES, 114/D DAMAN INDL. ESTATE, OPP. KOLSITE KADALYA, NANI, DAMAN PAN: AAGFP 6718E VS ITO, VAPI WARD-4, DAMAN (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.C.MATHEWS, SR.D.R. ASSESSEE(S) BY : NONE / // / DATE OF HEARING : 06/08/2013 / DATE OF PRONOUNCEMENT: 14/08/2013 / O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER : THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF LEARNED CIT(A), VALSAD, DATED 12.11.2009 FOR A.Y. 2005-06. THE ASSESSEE HAS RAISED ONLY ONE GROUND AS PER REVISED CONCISE GROUN D. THIS GROUND IS AS UNDER: LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRM ING THE DISALLOWANCE OF RS.1,47,944/-. BEING THE SUNDRY AMOUNT WRITTEN OFF. 2. IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESS EE BEFORE US THAT THE CLAIM OF THE ASSESSEE REGARDING DEDUCTION U/S. 36(1)(VII) WAS NOT ALLOWED BY THE AO ON THIS BASIS THAT THE ASSESSEE I S CLAIMING DEDUCTION U/S. 80IB(10) IN THE EARLIER YEAR TO THE EXTENT OF 100% AND NOW, THE ASSESSEE IS ALSO CLAIMING DEDUCTION U/S.36(1)(VII) AND, THEREFORE, IT AMOUNTS TO DOUBLE DEDUCTION. HE SUBMITTED THAT IN T HE PRESENT YEAR ALSO, THE ASSESSEE IS ELIGIBLE FOR 100% DEDUCTION U/S. 80 IB AND THE SAME WAS ITA NO.1991/AHD/ 2010 PENGUINE PANES VS. ITO. A.Y. 2005-06 - 2 - ALLOWED BY THE AO ALSO BUT HE MADE ADDITION OF THIS AMOUNT OF RS.1,47,944/-, WHICH IS NOT JUSTIFIED. AS AGAINST T HIS, IT IS SUBMITTED BY THE LEARNED DR OF THE REVENUE THAT IT IS NOT CLEAR AS TO WHETHER THE CLAIM OF THE ASSESSEE REGARDING DEDUCTION U/S 36(1)(VII) FOR RS.1,47,944/- IS IN RESPECT OF WRITE OFF OF SUNDRY DEBTORS OR WRITE OFF OF ADVANCES AND HENCE, THE MATTER SHOULD GO BACK TO THE FILE OF THE AO FOR A FRESH DECISION AFTER EXAMINING THE FACTS. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE FIND THAT COPY OF LEDGER ACCOUNT OF VARIOUS PARTIES IN W HOSE ACCOUNTS, THERE IS WRITE OFF OF SUNDRY DEBIT BALANCES IS AVAILABLE AT PAGES 25 TO 30 OF THE PAPER BOOK AND FROM THE SAME, IT IS SEEN THAT THE D EBITS TO ALL THESE ACCOUNTS WERE ONLY ON ACCOUNT OF SALES MIRROR (OSD) . AGAINST SUCH SALE IN EARLIER YEARS, PART AMOUNT WAS RECEIVED IN EARLI ER YEARS AND PART AMOUNT WAS RECEIVED IN PRESENT YEAR AND SOME PORTIO N WAS WRITTEN OFF IN THE PRESENT YEAR. HENCE, IT HAS TO BE ACCEPTED THAT THIS CLAIM OF SUNDRY BALANCE WRITTEN OFF IS ONLY ON ACCOUNT OF WRITE OFF OF BAD DEBTS, WHICH IS ALLOWABLE U/S. 36(1)(VII) BECAUSE THE ASSESSEE HAS ACTUALLY WRITTEN OFF THE SAME IN THE BOOKS AND IT WAS DECLARED AS INCOME IN THE EARLIER YEAR. REGARDING THIS OBJECTION OF THE AO THAT THE ASSESSE E IS CLAIMING DOUBLE DEDUCTION, ONE BY CLAIMING DEDUCTION U/S. 80IB IN T HE EARLIER YEAR AND AGAIN IN THE PRESENT YEAR BY WAY OF WRITE OFF OF BA D DEBTS, WE ARE OF THE CONSIDERED OPINION THAT THIS OBJECTION OF THE AO IS WITHOUT ANY VALID BASIS. THE ASSESSEE IS ELIGIBLE FOR 100% DEDUCTION U/S. 80IB IN THE EARLIER YEAR WHEN THE ASSESSEE DEBITED THE ACCOUNT OF THESE PARTIES AND IN THE PRESENT YEAR ALSO, THE ASSESSEE IS ELIGIBLE FOR 100 % DEDUCTION U/S. 80IB. ITA NO.1991/AHD/ 2010 PENGUINE PANES VS. ITO. A.Y. 2005-06 - 3 - HENCE, IF SUCH WRITE OFF IS EFFECTED IN THE YEAR IN WHICH THE SALE WAS AFFECTED THEN ALSO, THERE WILL BE NO IMPACT ON THE TAXABLE INCOME OF THE ASSESSEE IN ANY OF SUCH EARLIER YEAR OR IN THE CURR ENT YEAR. HENCE, WE DO NOT FIND ANY MERIT IN THE STAND TAKEN BY THE AO AND THEREFORE, WE DIRECT HIM TO ALLOW DEDUCTION TO THE ASSESSEE U/S. 36(1)(V II) WITHOUT ADDING BACK THE SAME IN THE INCOME OF THE ASSESSEE ON THE BASIS THAT DEDUCTION U/S. 80IB IS NOT ALLOWABLE ON ACCOUNT OF SUNDRY BAL ANCE WRITTEN OFF AS HAS BEEN DONE BY HIM. HENCE, THIS GROUND IS ALLOWED. WE ALSO FIND NO MERIT IN THE DECISION OF THE LEARNED CIT(A) THAT SUNDRY B ALANCE WRITTEN OFF IS CESSATION OF LIABILITY, WHICH IS TAXABLE U/S. 41(1) . THIS OBSERVATION OF LEARNED CIT(A) IS EVEN WITHOUT UNDERSTANDING THE FA CT THAT IN THE PRESENT CASE, THERE IS NO WRITE BACK OF LIABILITY BUT THERE IS A WRITE OFF OF AN ASSET AND, THEREFORE, SECTION 41(1) CANNOT COME INTO OPER ATION IN THE FACTS OF THE PRESENT CASE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON THE DATE MENTIONED ON CAPTION P AGE. SD/- SD/- (D.K. TYAGI) (A.K. GARODIA) JUDICIAL MEMBER ACCOU NTANT MEMBER PRABHAT KR. KESARWANI, SR. P.S. TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. #$#% ' '& / CONCERNED CIT 4. ' '&() / THE CIT(A)-III, AHMEDABAD ITA NO.1991/AHD/ 2010 PENGUINE PANES VS. ITO. A.Y. 2005-06 - 4 - 5. )*' %, ' ' % , ,-$ / DR, ITAT, AHMEDABAD 6. *./ 0 / GUARD FILE. / BY ORDER, 1 11 1/ // /,' #2 ,' #2 ,' #2 ,' #2 ( DY./ASSTT.REGISTRAR) ' ' % ' ' % ' ' % ' ' % , , , , ,-$ ,-$ ,-$ ,-$ / ITAT, AHMEDABAD ITA NO.1991/AHD/ 2010 PENGUINE PANES VS. ITO. A.Y. 2005-06 - 5 - 1. DATE OF DICTATION- 06.08.2013 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12.08.2013 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 8. DATE OF DESPATCH OF THE ORDER